Big Winners From the J.P. Morgan-Bank One Deal

Ripples from the $58 billion bid by J.P. Morgan Chase (JPM Quote) for Bank One (ONE Quote) are spreading across the stock market, as investors and money managers speculate on who's next.

According to the Wall Street consensus, the short list includes AmSouth Bancorp (ASO Quote), Comerica (CMA Quote), KeyCorp (KEY Quote), National City (NCC Quote), PNC Financial Services (PNC Quote), SouthTrust (SOTR Quote), SunTrust Banks (STI Quote), Sovereign Bancorp (SOV Quote), Union Planters (UPC Quote) and U.S. Bancorp (USB Quote).

The trick now for investors is to whittle the list down even further -- to pinpoint which banks are this year's most likely targets, which banks get snapped up because they are strategically positioned, and which banks benefit despite their status as nonplayers in the merger activity.

From these three perspectives, I've put together my own shorter short list of five bank-stock winners coming on the heels of the J.P. Morgan deal.

• The best acquisition-target stocks are AmSouth, Comerica and KeyCorp.


• SunTrust is best positioned strategically.


• Commerce Bancorp (CBH Quote) is the best buy among the nonplayers.

The Logic Behind the J.P. Morgan/Bank One Deal

Before diving right into my picks, it would first be useful to understand the logic behind the J.P. Morgan deal.

Like the 1998 acquisition of San Francisco's BankAmerica by North Carolina's NationsBank that created today's Bank of America (BAC Quote), the J.P. Morgan Chase-Bank One deal is about creating a bank with national scope. By adding Bank One's strength in the Midwest and parts of the South (Florida and Texas principally) to the New York-centric J.P. Morgan, the combined enterprise will have a national footprint on par with those of Citigroup (C Quote) and Bank of America.